Another Democrat trillion dollar mistake

You probably haven’t heard, but representative Karen Bass from California is proposing a bill that will cost taxpayers about a trillion dollars. Clearly, she has no idea of the ramifications of what she wants to do, but it will help her reelection next year.

As an example of short-term thinking, representative Karen Bass  of California is foolishly proposing changes to our spiraling education financing problem, the next big disaster waiting in the wings. She hopes to cap student interest rates at 3.4%  under the Student Loan Fairness Act, and will forgive student loans for graduates who pay their loans for ten years, capped at $45,000. This means taxpayers will have to absorb hundreds of billions (if not trillions) of dollars of loans that will be forgiven starting in about 2025. As most of the loan principle will not have been reduced (about 1/4) she is proposing almost free college education for all, at public expense. Yes, she is a Democrat. It does sound good, so I think that she is already pandering for re-election in 2014.

And no, the forgiven debt will not be considered taxable income to the student.

If this foolish “(un) Fairness Act” passes into law it actually encourages colleges to keep rapidly increasing tuition so that the minimum costs will be $45,000 knowing that they will be forgiven, or more accurately transferred to our national debt. The loan structure will change, so that students will take out two loans, one for $45,000 and the other for the additional costs.

As you know, Washington thinks short term, typically election season to election season. And as these seasons start up to fifteen months ahead of each two year general election, all decisions are fundamentally election driven. That will eventually destroy our country. I’ve campaigned on eliminating Congressional pensions if representatives don’t quit after eight years, and senators, twelve. I’m confident that careers will voluntarily end rather than lasting decades. A Term Limits amendment will never pass into law.

The real problem with our higher education system is that students can borrow any amount of money for their educations. Why? Because they are insured by the federal government. When unlimited amounts of money chase fixed resources, the cost of those resources, the college expenses, increase. It’s simple supply and demand.

A better solution will be to cap insured student loans at a lower amount. This will be the ceiling cost, not the base cost and the overall college costs will start to drop.

Don’t raise the bridge, lower the water.